As it looks to grow globally, particularly in the United States, Darwinbox, an Indian startup developing a SaaS platform for hiring, onboarding, and personnel administration, has secured $140 million to compete with companies like Rippling and Deel.
A number of anonymous investors are selling off portions of their holdings in the fundraising, which is being co-led by KKR and Partners Group and consists of a combination of primary and secondary share sales. Microsoft, Salesforce, Sequoia, TCV, Peak XV (previously Sequoia India), and Lightspeed are among the investors on Darwinbox’s roster.
In its most recent round, Darwinbox, which has received around $270 million overall, did not answer inquiries about its valuation.But when the local press broke the story last week, the company’s price tag was set at $950 Milion. The lead investors were among the other details that were accurately reported in that article.
If true, this fundraising effort would be considered a down-round, after Darwinbox raised money in 2022 at a valuation of more than $1 billion.
To put things in perspective, Deel and Rippling, two of the larger firms in the HR-tech sector, are both valued between $12 billion and $13 billion. Point solution vendors, as well as big, established incumbents like SAP, Oracle, and Workday, among dozens of other businesses, are Darwinbox’s other rivals.
Despite being smaller, Darwinbox is a company worth keeping an eye on for a few reasons.
First of all, as the technological ecosystem in the region develops and moves beyond e-commerce, it is one of the wave of domestic enterprise startups that have come out of Southeast Asia and India in recent years.
We were previously told by an investor that the trend was “the SaaS-ification of Asia.” It’s obvious that this is the area to look for the next great thing in technology when you consider the vast sums of money that move through it as well as the region’s total population.
The second reason is because this is a noteworthy instance of an Indian business that has succeeded in breaking out of its local market and gaining some momentum in the much sought-after U.S. market.
According to Darwinbox, it has over 1,000 business clients and offers more than 3 million people overall capabilities for managing personnel administration. It targets mid-market businesses with at least 3,000 workers.
According to the corporation, almost 60% of its revenue currently originates from sources outside of India. The U.S. is the company’s fastest-growing market, according to Jayant Paleti, who co-founded the business with Rohit Chennamaneni and Chaitanya Peddi, who spoke to TechCrunch. According to Paleti, he moved to Texas in the United States in order to take advantage of the opportunities there.
The third reason is Darwinbox’s comprehensive, aspirational approach to human resources.
According to Paleti, one of the first types of enterprise software is human resources. As a result, many systems are deeply embedded, even while there is a lot of legacy rubbish with plenty of opportunity for improvement. The majority of the startup’s sales effort consists of both persuading them that Darwinbox’s product is superior and persuading them that theirs is not.
“It almost felt overwhelming when we started in 2015,” he remarked. “As a trio in a remote part of Asia, we aspired to establish a multinational corporation capable of challenging these established players.”
Nevertheless, here is a humorous example of how Darwinbox has leveled the playing field: The firm name was the first thing that came up when I Googled Darwinbox recently, but the link actually led to Sage, one of its rivals. It was also evident that Oyster and a few other rivals were purchasing placements in opposition to Darwinbox searches.
The startup’s emphasis has so far stayed relatively single, despite the larger enterprise IT industry’s waxing and waning about whether platforms or point solutions are the best choice for end users.It has sought to create a comprehensive platform that can be used for sourcing and managing hiring as well as for onboarding new hires and managing their administration during their employment (holiday, expenses and time worked, payroll, etc.), and beyond.
The next phase of the product, according to Paleti, would probably incorporate a lot more AI. He believes the company is well-positioned to implement this because of its platform approach, which can power services holistically.
“We are HR’s system of record,” he declared.
Cyrus Driver, the company’s MD for private equity, told TechCrunch that Partners Group, one of the two main investors in this round, is investing $75 million in the business through this acquisition.
According to Driver, his company has been looking to invest for a few years, but this most recent round was the only one that gave them the chance.He stated, “We see them as one of a handful of disruptors in the bigger space displacing global majors,” adding that one notable aspect of the firm has been its ability to localize its offering as it has developed.
“They firmly believe they have the right to win, and we conducted extensive due diligence.”